Any requirement that homeowners who rent to vacationers first obtain a business license would be a deal breaker.
That’s the clear message from Missouri realtors as well as State Representative Rocky Miller, who has cosponsored House Bill 608 dealing with vacation home rentals. Miller represents District 124, which includes a portion of Lake of the Ozarks.
HB 608—referred to by some as “the Expedia bill” because of the online vacation services giant’s involvement in the bill-writing process and support for the bill—has been positioned primarily as a law that would prevent cities and counties in Missouri from banning vacation rentals. Municipalities such as Four Seasons and Lake Ozark have tried that at Lake of the Ozarks, as well as the city of Hermann, in Missouri wine country.
Expedia lobbyist Bill Shoehigh told LakeExpo.com the company has an interest in seeing vacation rentals flourish, since Expedia owns VRBO.com and HomeAway.com, two of the main websites that offer vacation home rentals and compete with the industry leader, AirBnB.
But Jorgen Schlemeier, who is a lobbyist for Missouri Hotel & Lodging Association (MHLA), has predicted major changes to the bill. No official amendments have been made yet, but behind the scenes, a variety of amendments can be floated before any are officially brought to committee.
Among those changes being considered, according to a letter sent by Schlemeier to the MHLA, is a requirement that homeowners who rent on a short-term (less than 31-day) basis would be required to obtain a business license.
“A business license of some type has been discussed and [I] believe that [it] may be included,” Schlemeier told LakeExpo.com. He acknowledged in his letter that “the realtors still do not like that provision.”
That may be putting it lightly.
The Missouri Realtors Advocacy Committee met on Monday, Feb. 20, to discuss some of the changes that are allegedly in the works, and Missouri REALTORS® President Ryan Gattermeir says the committee “agreed to oppose HB 608/HB 632 if the legislation gets amended to require short-term rental property owners hold a business license.”
Rep. Miller said this was the first he had heard of such a change, but that if it were attempted, he would pull his support from the bill.
However, he noted, “I’d be shocked if they were able to make those changes.”
A separate but related bill, HB 632—mentioned by Gattermeir—was put forward in January by District 123 Representative Diane Franklin. Franklin points out her bill deals only with ensuring residential properties are assessed at a residential tax rate, rather than a commercial one. But last year those two issues eventually met in one bill, which stirred controversy and confusion and died in the final days of the 2016 legislative session.
Schlemeier told the MHLA that the assessment issue “would likely be amended into [HB 608] if an agreement can be reached.”
Franklin acknowledges she met with Schlemeier and discussed several bills, but stopped short of pledging support if her HB 632 were rolled into another bill.
“Many things can change during the committee process and committing to support or oppose a bill before knowing that outcome, is not very smart,” Franklin told LakeExpo.com.
But Missouri REALTORS® says the business license requirement would be a deal breaker. According to Gattermeir, the committee also agreed:
- To oppose HB 608/HB 632 unless there is language included to treat residential homes being used for vacation rental the same as similar residential property, in regards to requiring improvements to the property. (i.e. fire suppression systems)
- To oppose HB 608/HB 632 unless the effective date is amended to August 28, 2017. (Many dates discussed so far have been after the first of the year or later before the law would take effect, giving to much of a window for cities or counties to rush and make changes)
For some vacation homeowners, a business license requirement would open the door for the government to regulate a home like it does a business—bringing in ADA compliance, fire suppression systems, and parking space requirements. Such requirements would be cost-prohibitive for many homeowners, and would effectively shut down vacation home rentals. HB 608 does prohibit municipalities from creating regulations that would effectively ban short-term rentals, but a homeowner would likely incur substantial legal costs to fight such a regulation and prove in court that the regulation violated the state law.
The bill comes up against competing interests and industries in Missouri.
The hotel industry is directly threatened by the growth of short-term home rentals, which compete for vacationers’ dollars. Schlemeier reassured those in the hotel/lodging industry, “we continue to refine the measure to ensure the bill adequately holds the home rental industry to proper standards, tax collection and location restrictions. The first two are nearly settled, the latter item continues to have discussion.”
Realtors tend to see vacation home rentals as a good thing—the prospect of vacation rental income can be a helpful selling point for buyers considering a second home. Some homeowners use that income to pay the mortgage on their vacation home. Missouri REALTORS® initially supported HB 608 and HB 632. But the group’s pushback this week came as a result of the proposed changes.
Gattermeir said, “Missouri REALTORS® original position was, and still is, to support legislation that protected owners of residential property offered for short-term rental from having their property taxed at a commercial rate. We also support legislation to protect the right of owners to offer short-term rentals without prohibition, undue regulation or interference by local government.”
He added, “We have become increasingly concerned with the positions of other stakeholders offering changes to the bills, therefore we have decided to oppose both bills and any others that do not have the safeguards listed above.”
Vacation homeowners have a major stake in the issue, but less lobbying power. Many see the legislation as unnecessary intrusion on their property rights and a threat to a substantial stream of income.
Those opposed to the bill, from realtors to homeowners to legislators, are watching warily. A group of Lake of the Ozarks realtors even attended a hearing on the HB 608 on Tuesday, Feb. 21, to ensure legislators hear their voices too.